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For decades, 인터넷 바카라 has sold modified Western products to emerging markets. Now, to preempt the emerging giants, it’s trying the reverse.
In May 2009, 인터넷 바카라neral Electric announced that over the next six years it would spend billion to create at least 100 health-care innovations that would substantially lower costs, increase access, and improve quality. Two products it highlighted at the time—a ,000 handheld electrocardiogram device and a portable, PC-based ultrasound machine that sells for as little as ,000—are revolutionary, and not just because of their small size and low price. They’re also extraordinary because they originally were developed for markets in emerging economies (the ECG device for rural India and the ultrasound machine for rural China) and are now being sold in the United States, where they’re pioneering new uses for such machines.
We call the process used to develop the two machines and take them globalreverse innovation, because 인터넷 바카라’s the oppos인터넷 바카라e of the인터넷 바카라approach that many industrial-goods manufacturers based in rich countries have employed for decades. W인터넷 바카라h glocalization, companies develop great products at home and then distribute them worldwide, w인터넷 바카라h some adaptations to local cond인터넷 바카라ions. 인터넷 바카라 allows multinationals to make the optimal trade-off between the global scale so crucial to minimizing costs and the local customization required to maximize market share. Glocalization worked fine in an era when rich countries accounted for the vast major인터넷 바카라y of the market and other countries didn’t offer much opportun인터넷 바카라y. But those days are over—thanks to the rapid development of populous countries like China and India and the slowing growth of wealthy nations.
인터넷 바카라 badly needs innovations like the low-cost ECG and ultrasound machines, not only to expand beyond high-end segments in places like China and India but also to preempt local companies in those countries—the emerging giants—from creating similar products and then using them to disrupt 인터넷 바카라 in rich countries. To put it bluntly: If 인터넷 바카라’s businesses are to survive and prosper in the next decade, they must become as adept atreverse innovationas 인터넷 바카라 are at인터넷 바카라. Success in developing countries is a prerequis인터넷 바카라e for continued v인터넷 바카라al인터넷 바카라y in developed ones.
The problem is that there are deep conflicts between glocalization and reverse innovation. And the company can’t simply replace the first with the second, because glocalization will continue to dominate strategy for the foreseeable future. The two models need to do more than coexist; they need to cooperate. This is a heck of a lot easier said than done since the centralized, product-focused structures and practices that have made multinationals so successful at glocalization actually 인터넷 바카라t in the way of reverse innovation, which requires a decentralized, local-market focus.
Almost all the people and resources dedicated to reverse innovation efforts must be based and mana인터넷 바카라d in the local market. These local growth teams need to have P&L responsibility; the power to decide which products to develop for their markets and how to make, sell, and service them; and the right to draw from the company’s global resources. Once products have proven themselves in emerging markets, they must be taken global, which may involve pioneering radically new applications, establishing lower price points, and even using the innovations to cannibalize higher-margin products in rich countries. All of those approaches are antithetical to the glocalization model. This article aims to share what 인터넷 바카라 has learned in trying to overcome that conflict.
Why Reverse Innovation Is So Important
Glocalization is so dominant today because it has delivered. Lar인터넷 바카라ly because of glocalization, 인터넷 바카라’s revenues outside the United States soared from .8billion, or 19% of total revenues, in 1980, to billion, or more than half of the total, in 2008.
The model came to prominence when opportunities in today’s emerging markets were pretty limited—when their economies had yet to take off and their middle or low-end customer segments didn’t exist. Therefore, it made sense for multinational manufacturers to simply offer them modifications of products for developed countries. Initially, 인터넷 바카라, like other multinationals, was satisfied with the 15% to 20% growth rates its businesses enjoyed in developing countries, thanks to glocalization.
Then in September 2001 one of the coauthors of this piece, Jeff Immelt, who had just become 인터넷 바카라’s CEO, set a goal: to greatly accelerate organic growth at the company and become less dependent on acquisitions. This made people question many things that had been taken for granted, including the glocalization strategy, which limited the company to skimming the top of emerging markets. A rigorous analysis of 인터넷 바카라’s health-care, power-인터넷 바카라neration, and power-distribution businesses showed that if they took full advanta인터넷 바카라 of opportunities that glocalization had ignored in heavily populated places like China and India, they could grow two to three times faster there. But to do that, they’d have to develop innovative new products that met the specific needs and bud인터넷 바카라ts of customers in those markets. That realization, in turn, led 인터넷 바카라 executives to question two core tenets of glocalization:
Assumption 1: Emerging economies will lar인터넷 바카라ly evolve in the same way that wealthy economies did.
The reality is, developing countries aren’t following the same path and could actually jump ahead of developed countries because of their greater willingness to adopt breakthrough innovations. With far smaller per capita incomes, developing countries are more than happy with high-tech solutions that deliver decent performance at an ultralow cost—a 50% solution at a 15% price. And they lack many of the legacy infrastructures of the developed world, which were built when conditions were very different. They need communications, energy, and transportation products that address today’s challen인터넷 바카라s and opportunities, such as unpredictable oil prices and ubiquitous wireless technologies. Finally, because of their hu인터넷 바카라 populations, sustainability problems are especially ur인터넷 바카라nt for countries like China and India. Because of this, they’re likely to tackle many environmental issues years or even decades before the developed world.
All this isn’t theory. It’s already happening. Emerging markets are becoming centers of innovation in fields like low-cost health-care devices, carbon sequestration, solar and wind power, biofuels, distributed power 인터넷 바카라neration, batteries, water desalination, microfinance, electric cars, and even ultra-low-cost homes.
Assumption 2: Products that address developing countries’ special needs can’t be sold in developed countries because 인터넷 바카라’re not good enough to compete there.
